Can Zim deal with economic effects of major disasters?

The World Bank’s Disaster Risk Management Hub in Tokyo, in a case study of Japan titled Built Environment — Transforming Disaster Experience into a Safer Built Environment, stated that Japan “developed a policy and legal framework, as well as compliance mechanisms that ensure a high-level of building safety and earthquake resilience. Japan started with similar conditions to the current situation of some developing countries (with limited technical knowledge, poor construction quality, and a large housing demand) and can therefore, serve as a model for developing countries seeking to increase the safety of the built environment”.

Daniel Ngwira,Chartered accountant

This simply implies that a country can start where it is and incrementally develop until it is better prepared for disaster risks. With experience, Zimbabwe has been improving in its disaster management though there is still a lot to learn. In many cases, the major drawback of implementing proper disaster risk management is financial, technical and knowledge). At the end of the day the three could sum down to financial as finance may be needed to sponsor education or knowledge and technical. In times of disasters, citizens look up to their government for assistance as these are normally desperate times.

The Global Facility for Disaster Reduction and Recovery (GFDRR), a global partnership established a decade ago with the aim of providing a pillar of support to developing nations, states in its 2018-2021 strategy document that “disasters are already keeping people and countries in poverty through direct and indirect losses to property and livelihoods. This trend will only be exacerbated as people increasingly feel the effects of climate change. Development objectives — such as the eradication of extreme poverty and universal access to basic services — will not be achieved without enhanced action to manage risks”.

In 2007, the Civil Protection Unit reported that cyclone Eline, which occurred in 2000, affected 2,7 million people and of these, two million were in the vulnerable group. The floods caused by the cyclone caused deaths and damage to property, including livestock. The department also noted that drought is the single biggest natural disaster that affects the country and that in the prolonged droughts of the eighties and nineties the droughts resulted in 60% cereal grain output reduction while livestock herd was reduced by about 50%. In every 10 years the country experiences 2,3 years of bad rain seasons.

Hurricane Harvey came and wrecked havoc on Texas and Louisiana in the United States, leaving at least 45 known to be dead.

The entirety of the land mass was turned into an ocean with residence making use of their boats to assist both the neighbours and families.

While flooding happened slowly, the hurricane is believed to have deposited in excess of 27 trillion gallons of water in the process reminding people of the 2005 Hurricane Katrina that caused massive damage with a punitive bill of US$160 billion.

Katrina tainted the legacy of the George W Bush administration as it was blamed for being less responsive. In fact, the disastrous effects of the disaster are believed to have been as a result of the government not having acted swiftly and with little efficacy. Analysts have estimated the cost of Harvey to be nearly US$200 billion while others believe it will not exceed US$80 billion.

US President Donald Trump requested federal funding to the tune of US$8 billion, an amount twice the budget of Zimbabwe or at least half the GDP of the southern African country.

The fact that the richest country on earth battled with Harvey shows the magnitude of the hurricane was enormous. Yet without the resources at its disposal, the death toll could have been worse. For instance the use of helicopters and boats assisted in alleviating the disaster.

In Zimbabwe, there are very few people with boats to save both family and neighbours in such a disaster. Unlike Bush on Katrina, Trump was praised to have responded very well. The only problem was that Trump spoke of immigration enforcement at the wrong time during the disaster.

Trump is expected to announce an end to Deferred Action for Childhood Arrivals (DACA) a programme that protects young undocumented immigrants from deportation. They number is nearly 800 million.

Harvey, however, resulted in around two million people being accommodated in shelters. A decision was made not to evacuate residents as it was feared that the commotion that would result from people running away from the disaster would have made things worse by causing a logjam in the transportation system thereby causing unnecessary loss of life and injury. Naturally, given the scale of the disaster, most vulnerable people were the elderly, the sick and the children. Despite this, residents, citizens, the state, the cities and the federal government did their best to save lives.

Post the disaster, as people clean up, citizens and residents, through various platforms like television network, CNN, have been calling upon volunteers to put together a fund or support by resources for those who were affected by the disaster. This is despite that government could allocate no less than US$8 billion towards those affected by the disaster.

Businesses suspended operations. The more businesses remain closed, the more revenue is lost. It was expected that businesses would start operating on Tuesday.

In a paper titled Hurricane Havery’s Impact — And How It Compares To Other Storms, published on September 2 by Rachael Dottle et al, aver that: “In general, hurricanes are a particularly devastating type of natural disaster. Of the billion dollar disasters … the 10 most destructive hurricanes caused an estimated US$442 billion in losses, over a third of the US$1,2 trillion caused by all 212 events combined. And while billion-dollar hurricanes haven’t been growing more frequent, Harvey and other super-damaging weather and climate disasters are part of a continuing, costly trend.”

There is something to learn about the disasters that have occurred on the globe, including the recent ones that have hit America. Disasters will always be there. What is only needed is to plan for them in such a way that the loss of lives is minimised while the economic impact is also managed to an acceptable level. The best way of planning how to deal with a disaster is when everything is okay.

When resources are available, what is left is mainly the co-ordination and deployment of those resources to help minimise both loss of life and economic cost. In the absence of proper planning, disasters have the potential to cripple an economy that is ill-prepared.

Zimbabwe is currently operating on a shoe-string budget of which over 90% goes towards recurrent expenditure. Any slight miss of revenue targets means that the country may not be able to meet its running costs. In that instance, it entails that in the event of a disaster the country may have to rely on donor funding which depends on the benevolence of funders.

Thus it follows that one of the ways to plan and to prepare for disasters is to be economically prepared. The way to build reserves which can be used in cases of disasters is to grow the economy through the implementation of the right mix of policies.

Adam Smith, in his book The Wealth of Nations 1776, once said countries amass wealth so that they can fund wars, among other factors. I go a step further and say countries must amass wealth so that they can be prepared for any eventualities, including natural and man-made disasters.

But money alone is not a panacea of all ills. The way Zimbabwe is structured makes it vulnerable when major disasters strike the economic centres of the country. Harare is both the capital and commercial city. Most services are centralised in Harare.

While Bulawayo is the second biggest centre, it is undeniable that it less defines the economy of Zimbabwe compared to Harare. Should a major disaster strike Harare in the same magnitude as seen in Texas, then the economy could literally grind to a halt and severely affect the country’s GDP.

This therefore calls for the country to fully decentralise the government activities to other cities. Private businesses will follow the administrative developments of the country. In fact, the recent congestion that has gripped Harare can be partly attributed to the fact that Harare is where everything literally happens and as such people will be competing to be in the city compared to other sections of the country.

Of the eight areas of engagement proposed in the GFDRR strategy report, one specifically addresses finance. GFDRR refers to this as “deepening financial protection”. It stresses the ability for governments to manage the financial impact of disaster and climate shocks as critical to long term recovery and sustainable development.

The strategy report states: “GFDRR, through its partnership with the Finance and Markets Global Practice of the World Bank, connects financial expertise with government and industries to develop comprehensive financial protection strategies, create innovative policies and instruments, and structure effective financial protection programs. By 2021, GFDRR aims to train more than 500 government officials in financial protection and enable direct and indirect insurance programs that will eventually cover more than 100 million people.”

It should be noted that comprehensive financial protection strategies are easier to support with country generated reserves which at this point in time Zimbabwe lacks. In the wake of hurricane Harvey it has been noted that international aid has been slow in coming in the United States. Fortunately it is a robust economy which can afford to cover its vulnerabilities.

Full recovery, naturally takes longer though relief can be granted in the short-term. The government of Zimbabwe should therefore treat economic development as a matter of urgency to cover for lost ground.

Ngwira is a chartered accountant, former bank treasurer and former university lecturer. He holds finance and business qualifications. — daniel.ngwira@gmail.com/ cell: +267 73 113 161.